Soil Characteristics and Crop Insurance Losses

Abstract We consider the relationship between soil characteristics and crop insurance losses. Note that crop insurance losses are typically considered to be a reliable measure of overall yield risk. Our results indicate that several soil characteristics linked to erosion are related to overall loss ratios in the federal crop insurance program. If premium rates adequately account for the risks associated with soil characteristics, there should be no relationship between loss ratios and soil characteristics. Thus, our results indicate that gains in the accuracy of insurance premium rates may be achievable from a greater focus on soil characteristics. We also consider the relationship of specific hazards with soil characteristics and find that different soil factors have varied relationships with specific causes of loss in the federal crop insurance program.